Why Toyota is World's Leading Brand

Brief History of Toyota:

                                        

              The official Toyota history is, like that of most companies, fairly glossy and bare-bones. Sakichi Toyoda, a prolific inventor, created the Toyoda Automatic Loom Company based on his groundbreaking designs, one of which was licensed to a British concern for 1 million yen; this money was used to help found Toyota Motor Company, which was supported by the Japanese government partly because of the military applications. The Japanese relied on foreign trucks in the war in Manchuria, but with the Depression, money was scarce. Domestic production would reduce costs, provide jobs, and make the country more independent. By 1936, just after the first successful Toyoda vehicles were produced, Japan demanded that any automakers selling in the country needed to have a majority of stockholders from Japan, along with all officers, and stopped nearly all imports.

                  Toyoda's car operations were placed in the hands of Kiichiro Toyoda, Sakichi Toyoda’s son; they started experimenting with two cylinder engines at first, but ended up copying the Chevrolet 65-horsepower straight-six, using the same chassis and gearbox with styling copied from the Chrysler Airflow. The first engine was produced in 1934 (the Type A), the first car and truck in 1935 (the Model A1 and G1, respectively), and its second car design in 1936 (the model AA). In 1937, Toyota Motor Company was split off. From 1936 to 1943, only 1757 cars were made – 1,404 sedans and 353 phaetons (model AB), but Toyoda found more success building trucks and busses.

 In 1959, the company opened its first plant outside Japan - in Brazil. From that point on, Toyota maintained a philosophy of localizing both production and design of its products (that is, adapting vehicles to the places they will be used, as well as building them there). This builds long-term relationships with local suppliers and local labor. Part of this also means that Toyota does not merely build vehicles overseas, but also designs them there, with a network of both design and R&D facilities in North America and Europe.

While Toyota built good near-luxury cars, sales of the Cressida and Crown were not especially strong, especially given the brisk trade in Corollas and Camry’s.                                     

           Toyota first caught the world’s attention in the 1980s, when it became clear there was something special about Japanese quality and efficiency. Japanese cars were lasting longer than American cars and required less repair. And by the 1990s it became apparent that there was something even more special about Toyota compared to other Automakers in Japan (Womack, Jones and Roos, 1991).It was not eye-popping car design or performance thought the ride was smooth and the designs often very refined. It was the way Toyota engineered and manufactured the autos that led to unbelievable consistency in the process and product. Toyota designed autos faster, with more reliability, yet at a competitive cost, even when paying the relatively high wages of Japanese workers. Equally impressive was that every time Toyota showed an apparent weakness and seemed vulnerable to the competition, Toyota miraculously fixed the problem and came back even stronger. Today Toyota is the third-largest auto manufacturer in the world, behind General Motors and Ford, with global vehicles sales of over six millions per year in 170 countries. However, Toyota is far more profitable than any other auto manufacturer. Auto industry analyst estimate that Toyota will pass Ford in global vehicles sold in 2005, and if current trends continues, it will eventually pass GM to become the largest Automaker in the world.

               

Profit Margin and Market Share:

                                                    

               Every automotive industry insider and many consumers are familiar with the Toyota’s dramatic business success and world- leading Quality:

§  Toyota’s annual profits at the end of its fiscal year March 2003,was $8.13 billion larger than the combined earning of GM, Chrysler, and Ford, and the biggest annual profit for any auto maker in at least a decade. Its net profit margin is 8.3 times higher than the industry average.

§  While stock prices of the Big 3 were falling in 2003, Toyota’s shares had increased 24% over 2002. Toyota’s market capitalization (the total value of the company’s stock) was $ 105 billions as of 2003-higher than the combined market capitalization of Ford, General Motors, and Chrysler. This is an amazing statistic. Its returns on assets are 8 times higher than the industry average. The company has made a profit every year over the last 25 years and $20-$30 billions in its cash wars chest on a consistent basis.

§  Toyota’s has for decades been the number one automaker in Japan and a distant fourth behind the “Big 3” automakers in North America. But in August of 2003,for the first time , Toyota sold more vehicles in North America than one of the “Big 3” automakers(Chrysler).It seems that Toyota could eventually become a permanent member of the “Big 3” U.S. automaker.(Of 1.8 millions Toyota/Lexus vehicles sold in North America in 2002,1.2 million were made in North America. Toyota is rapidly building new production capacity in the U.S. at a time when U.S. manufacturer are looking for opportunities to close plants, reduce capacity and move production abroad.)

§  In 2003 the Toyota nameplate was on track to sell more vehicles in the U.S. than either the two brand names that have led U.S. sales for the past 100 years-Ford and Chevrolet. Camry was the top selling U.S. passenger car in 2003 and five of the years prior. Corolla was the top selling small car in the world. 

§  Toyota not long ago was known for making small, basic transportation vehicles, yet in the ten years leaped out to become the leader in luxury vehicles. Lexus was introduced in 1989 and in 2002 outsold BMW, Cadillac, and Mercedes-Benz in the U.S. for the third year in a row.

§  Toyota invented “lean production”(also known as “the Toyota production system” or “TPS”),which has triggered a global transformation in virtually every industry  to Toyota’s manufacturing and supply chain philosophy and methods over the last decades. The  Toyota Production is the foundation of dozens of books on “lean” including two best sellers: The Machine that changed the World: The story of lean Production (Womack,Jones&Roos,1991)and Lean thinking (Womack&Jones,1996). Toyota employees are sought out by companies in almost every industry throughout the world for their expertise.

§  Toyota has the fastest product development process in the world. New cars and trucks take 12 months or less to design, while competitors typically require two to three years.

§  Toyota is benchmarked as the best in class by all of its peers and competitors throughout the world for high quality, high productivity, manufacturing speed, and flexibility. Toyota automobiles have consistency been at the top of quality ranking by J.D. powers and Associates, Consumers Reports, and others for many years. 

            

 Successful Products: 

         Much of the Toyota success comes from its astounding quality reputation. Consumers know that they can count on their Toyota vehicle to work right the first time and keep on working, while most U.S. and European automotives companies produce vehicles that may work when new but almost certainly will spend time in the shop in a year or so. In 2003 Toyota recalled 79 % fewer vehicles in the U.S. than Ford and 92 % fewer than Chrysler. According to 2003 study in Consumer Report, one of the most widely read magazines for auto-buying customers, 15 of the top 38 most reliable from any manufacturer over the last seven years were made by Toyota/Lexus. No other manufacturer comes close. GM, Mercedes, and BMW have no cars on this list. Not a single Toyota is on the dreaded “vehicles to avoid” while a handful of Fords, almost 50 percent of the GMs, and more than 50 percent of the Chryslers are to be avoided, according to Consumer Reports.

      Here are some other statistics from Consumers reports’ 2003 annual auto issue:

§  In the small Car Category (Toyota Corolla, Ford Focus/Escort,  GM Cavalier, and Chrysler Neon), Toyota won each of the last three years for overall reliability ,as well the prior three years, and predicted reliability for the 2003 model year.

§  For family sedans, the Toyota Camry beat out the Ford Taurus, the GM Malibu, and Dodge Intrepid, winning in the last three years, the three prior years, and predicted reliability for the 2003 model year.

§  More than half of all Toyota used cars are singled out as “recommended for purchased,” compared with less than 10 percent of the Fords, 5 percent of the GMs, and none of the Chryslers.

§  Toyota/Lexus has also dominated the J.D.  Powers “initial quality and long-term durability ranking for years. Toyota Lexus was again the # 1 most reliable of Car, according to the J.D.  Powers 2003 quality survey, followed by Porsche, BMW, and Honda.

                                            

      

 Toyota’s Global Vision and Mission:

                                                                       

                          Mission of Toyota is to provide safe & sound journey. Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world.

 In 1995, when Okuda was executives vice president of, he directed the management Planning department to create a vision in order give concrete shape to what Toyota would like in ten years. Behind this vision lay ambitious quantitative goal for such things as consolidated sales growth, operating profits, and numbers of vehicles to sale to be achieved by 2005, goals that kept sight of what was occurring at GM and Ford.” Some people call becoming number one in the world ‘hegemony’”, said Okuda,”but the chairman (then Shoichiro Toyoda) and I share an underlying commitment to that goal.”

                                               Toyota had already become a giant corporation, one with a tremendous influence on society. A policy to expand even further necessitated staying in the harmony with the society.”From the 20^th to the 21^st centuries Okuda predicted,”the new winds of world environmental issues, globalization, and the IT revolution have swept across the automotive industry. Within five or ten years, there will be a major paradigm shift that will redefine the car industry and even cars themselves. 

             

                    Toyota President Katsuaki Watanabe, in his 2007 new year’s greeting, said that Toyota must implement thorough measures concerning quality and reinforce the foundations of manufacturing by implementing additional localization measures, including human resources development from a global perspective and further support for local affiliates to operate autonomously. Toyota intends to introduce a flexible fuel vehicle (FFV) that can run on 100% bio-ethanol in Brazil. The year 2007 will be the 70th anniversary of the establishment of Toyota Motor Corporation. Toyota recently put special Komatsu stamping equipment into its San Antonia plant; the new presses use a third less energy than the prior stumpers, and are quiet enough that employees no longer need sound protection gear. The stamps are smaller as well, so the factory ceilings can be lowered, dramatically cutting heating and cooling costs. The new stamps will be used in all Toyota’s new North American plants, according to Automotive News, and will be retrofitted to older plants. The main difference is the technology, which uses servo motors rather than hydraulics. Toyota is the world’s first automaker to use the new technology.

 

Toyota’s Manufacturing Plants and Operational Countries:

          Toyota is the seventh largest company in the world and the second largest manufacturer of automobiles, with production facilities in 28 nations around the world - and the highest-production facility of any non-domestic automaker in the United States. Generally, Japanese plants are flexible and produce multiple models, while foreign (especially American) plants are devoted to a single model. In June 2006, Toyota had 52 overseas manufacturing companies in 27 countries outside Japan; Toyota markets vehicles in more than 170 countries / regions. The Toyota Motor Group sold about 8.8 million Toyota/Lexus, Daihatsu and Hino vehicles worldwide in 2006, marking a new record. In 2007, the Group is aiming for a 6 percent increase in worldwide sales.

             Now here is the detail of Toyota’s plants all around the world.

North America: United States, Canada, Mexico:

Location	Start Date	Models (2002)	Models (2003)	Models (2006)	Employees and Capacity (2003)	Notes
Fremont, California, US (NUMMI)	1984	Corolla - 157,561 Tacoma - 151,566 Voltz* - 8,108 Pontiac Vibe - 59,552 Total - 369,836	Corolla - 157,561 Tacoma - 161,566 Voltz* - 1,733 Pontiac Vibe - 74,223 Total - 395,083	Corolla Vibe Total: 428,633	5,600 people 370,000 vehicles	Former poor-quality GM plant. UAW. Joint venture. Currently high quality. 5,400 employees in 2006. Japanese president. Free daily tours.
Huntsville, Alabama, US	2003	V6 and V8 engines for Tundra and Tacoma	52,318 V8s		350 people (500 in 2005) 120,000 V8 130,000 V6
Tijuana, Mexico	2002	n/a	Tacoma	34,465 Tacomas	150 people (700 in 2004) 30,000 trucks, 180,000 Tacoma beds	Japanese president; expanded in 2007 to capacity of 50,000. 760 employees in 2007.
Cambridge, Ontario, Canada	1987	95,030 Corollas 42,406 Solaras 80,582 Matrix 158,269 engines	135,428 Corollas 78,781 Matrix 13,334 RX330 200,317 I-4 engines	317,433 Corolla, Matrix, RX350	4,230 people 250,000 vehicles 150,000 engines	4,602 employees; North American president; Matrix to be replaced by Blade in 2008
Princeton, Indiana, US (TMMI)	1996	109,025 Tundra 77,561 Sequoias	105,663 Tundra 66,671 Sequoias 119,196 Siennas	324,190 Tundras, Sequoias, Siennas	4,700 people 500,000 vehicles	2006: 4,645 people; FX-SX starts Q1 2008
Princeton, Indiana (Toyota Motor Mfg)	1996	n/a	4-speed Camry automatics 5-speed Sienna, RX330 automatics Corolla/Matrix/Vibe engines		360,000 transmissions
Georgetown, Kentucky (US)	1986	Avalon Camry Camry Solara	Avalon Camry Camry Solara Sienna	Avalon Camry Solara Camry Hybrid	6,900 employees 500,000 vehicles 500,000 engines	Toyota’s largest facility outside of Japan; highest production of any foreign plant in the US. Also builds four and six cylinder engines and powertrain parts. American president. Builds Toyota’s first American-made hybrid.
Buffalo, West Virginia (US)		201,273 Fours 152,070 V6s 360,957 Trans	225,402 Fours 171,808 V6s 382,510 Trans		930 people 340,000 Fours 200,000 Sixes 360,000 Trans	Builds four cylinder and V6 engines and automatic transmissions. Started making automatic transmission gears in 2006.
Delta, B.C. (Canadian Autoparts Toyota)	1983	Wheels	Wheels		1.45 million wheels	Makes aluminum alloy wheels for the North American and Japanese markets. “CAPTIN”
Long Beach, CA (TABC)		Parts (see description)	Parts (see description)		Not listed	Toyota’s first U.S. manufacturing plant; produces sheet metal components, steering columns, catalytic converters, and coated catalytic substrates for US and export. Assembles commercial trucks for Hino Motors to be sold in North America and beginning in 2005, will assemble 4-cylinder engines.
San Antonia, TX (TMMTX)	2006	None	One Tundra per minute starting in 2007		2,100 people in 2007	$1.3 billion plant, capacity 200,000/year, production started Nov 2006.
Blue Springs, Mississippi	2010?	None	150,000 Highlanders per year starting in 2010		2,000 people in 2010	$1.3 billion plant started in 2007, near Tupelo
Cambridge, Ontario, Canada	1987	95,030 Corollas 42,406 Solaras 80,582 Matrix 158,269 engines	135,428 Corollas 78,781 Matrix 13,334 RX330 200,317 I-4 engines		4,230 people 250,000 vehicles 150,000 engines
Ontario, Canada	2009?					New plant to build RAV4

Europe and Africa:

Toyota first entered the United Kingdom in 1992, and currently employees nearly 3,000 people there. The Avensis and Corolla are made at Burnaston (near Derby), and engines are made at Deeside, North Wales. The Bernaston plant, Toyota’s first auto assembly plant in Europe, can make up to 220,000 cars per year.

Toyota seems satisfied with its British factories, despite the strength of the pound against the euro. Toyota argued that, while other companies (particularly Ford) are moving to continental Europe to get better exchange rate, Toyota was happy with the efficiency of its British plants, particularly the Burnaston factory.

TMC = Toyota Motor Corp., TEMA = Toyota Motor Engineering & Manufacturing

North America,Inc., TICO = Toyota Industries Corp.

Location	Name	Start of operations	Toyota equity	Products	Number of employees	2006 production
Czech Republic	Toyota Peugeot Citroën Automobile Czech (TPCA) *	Feb. 2005	TMC 50% Peugeot-Citroën 50%	Aygo	3,345	100,000
France	Toyota Motor Manufacturing France S.A.S. (TMMF)	Jan. 2001	TME 100%	Yaris, engines	3,829	250,000 Yaris 192,000 engines
Kenya	Associated Vehicle Assemblers Ltd.	Aug. 1977	None	Hiace, Land Cruiser	360	1,000
Poland	Toyota Motor Manufacturing Poland (TMMP)	Apr. 2002	TME 94.3%	Transmissions, engines	1,982	331,000 transmissions 102,000 engines
Poland	Toyota Motor Industries Poland (TMIP)	Mar. 2005	TME 60% TICO 40%	Engines	932	45,000
Portugal	Toyota Caetano Portugal.	Aug. 1968	TMC 27%	Dyna, Hiace, Optimo	950	4,000
Russia	Toyota Motor Manufacturing Russia (TMMR)	Dec. 2007	TMC 80% EBRD 20%	Camry	600	–
South Africa	Toyota South Africa Motors	Jun-62	TMC 75.0%	Corolla, Dyna, Hiace, Hilux, Fortuner, engines	8,690	147,000 vehicles 96,000 engines
Turkey	Toyota Motor Manufacturing Turkey (TMMT)	Sep. 1994	TME 90% Mitsui 10%	Corolla	3,421	177,000
U.K.	Toyota Motor Manufacturing (UK) (TMUK)	Sep. 1992	TME 100%	Avensis, Corolla, engines	4,897	282,000 vehicles 175,000 engines

Toyota’s Asian Factories:

TMC = Toyota Motor Corp., TEMA = Toyota Motor Engineering & Manufacturing North America,Inc., TICO = Toyota Industries Corp.

China:

Name	Start of operations	TMC-related equity	Products	Number of employees	2006 production
Tianjin Jinfeng Auto Parts Co., Ltd. (TJAC)	July 1997	TMC 30%	Steering assy, propeller shafts	410	–
Tianjin Fengjin Auto Parts Co., Ltd. (TFAP)	May 1998	TMC 90%	Continuous velocity joints, axles	350	–
Tianjin FAW Toyota Engine Co., Ltd. (TFTE)	Jul 1998	TMC 50%	Engines	800	134,000 engines
Tianjin Toyota Forging Co., Ltd. (TTFC)	Dec 1998	TMC 100%	Forging parts	100	–
Tianjin FAW Toyota Motor Co., Ltd. (TFTM)	Oct 2002	TMC 40% TMCI 10%	Corolla, Vios, Crown, Reiz	2,310	209,000
FAW Toyota (Changchun) Engine Co., Ltd. (FTCE)	Dec 2004	TMC 50%	Engines	250	–
Toyota FAW (Tianjin) Dies Co., Ltd. (TFTD)	Dec 2004	TMC 90%	Stamping dies for vehicles	160	–
Guangqi Toyota Engine Co., Ltd. (GTE)	Jan 2005	TMC 57.6% TMCI 12.4%	Engines, engine parts (cams, cranks)	50	–
Sichuan FAW Toyota Motor Co., Ltd. (SFTM) *	Dec 2000	TMC 45% TTC 5%	Coaster, Land Cruiser, Prado, Prius	1,800	16,000
Guangzhou Toyota Motor Co., Ltd. (GTMC)	May 2006	TMC 30.5% TMCI 19.5%	Camry	1,400	61,000

Other Countries of Asia:

Location	Name	Start of operations	TMC-related equity	Products	Number of employees	2006 production
Bangladesh	Aftab Automobiles*	June 1982	None?!	Land Cruiser	110	–
Taiwan	Kuozui Motors, Ltd.	Jan 1986	TMC 51.7%	Camry, Corolla, Hiace, Vios, Zace, Wish, Yaris, engines, stamping parts	2,486	97,000
India	Toyota Kirloskar Motor Private Ltd.(TKM)	Dec 1999	TMC 89%	Innova, Corolla	2,567	44,000
India	Toyota Kirloskar Auto Parts Private Ltd.(TKAP)	July 2002	TMC 64% TICO 26%	Axles, propeller shafts, transmissions	742	–
Indonesia	PT. Toyota Motor Manufacturing Indonesia	May 1970	TMC 95%	Dyna, Fortuner, Innova, Kijang, engines	3,949	60,000 cars 233,000 engines
Indonesia	P.T. Astra Daihatsu Motor	Jan 1992	TMC 61.75%	Avanza	5,045	63,000
Malaysia	Assembly Services Sdn. Bhd (ASSB)	Feb 1968	UMW Toyota 100%	Camry, Corolla, Vios, Hiace, engines, Hilux, Innova, Fortuner	3,232	54,000 cars 11,000 engines
Malaysia	Perodua Manufacturing Sdn. Bhd	Aug. 1994	TMC 51%	Avanza	6,486	28,000
Pakistan	Indus Motor Company Ltd.*	Mar. 1993	TMC 12.5% TTC 12.5%	Corolla, Hilux	1,651	35,000
Philippines	Toyota Autoparts Philippines Inc. (TAP)	Sep. 1992	TMC 95%	Transmissions, continuous velocity joints	578	221,000 transmissions
Philippines	Toyota Motor Philippines Corp. (TMP)	Feb. 1989	TMC 34%	Camry, Corolla, Innova	1,289	14,000
Thailand	Siam Toyota Manufacturing Co., Ltd.	Jul 1989	TMC 96%	Engines, propeller shafts, casting (block, head)	1,219	404,000 engines
Thailand	Toyota Auto Body Thailand Co., Ltd.	May 1979	TMT 49%	Stamping parts	141	–
Thailand	Toyota Motor Thailand Co., Ltd. (TMT)	Dec 1964	TMC 86.4%	Camry, Corolla, Vios, Wish, Hilux VIGO, Yaris	6,172	410,000
Thailand	Thai Auto Work Co., Ltd. (TAW)	May 1988	TABJ 20.0% TABT 60.0%	Fortuner, Hilux VIGO	477	60,000
Vietnam	Toyota Motor Vietnam Co., Ltd.	Aug 1996	TMC 70%	Camry, Corolla, Vios, Hiace, Land Cruiser, Innova	712	14,000

* Produces vehicles other than Toyotas, too.


Toyota’s Plants in South America:

Location	Name	Start of operations	TMC-related equity	Products	Number of employees	2006 production
Argentina	Toyota Argentina	1997	100%	Hilux, Fortuner	2,523	65,000
Brazil	Toyota do Brasil	1959	100%	Corolla, Fielder	2,525	60,000
Colombia	Sociedad de Fabricacion de Automores	1992	28%	Land Cruiser Prado	1,316	7,000
Venezuela	Toyota de Venezuela	1981	90%	Corolla, Dyna, Land Cruiser, Fortuner, Hilux	1,708	23,000

Toyota’s Factories in Japan:

Name	Main products	Start of Operations	Number of Employees	Equity share (%)
Toyota Motor Kyushu, Inc.	Harrier, Harrier Hybrid, Kluger, Kluger Hybrid, IS, ES	1992	4,191	100
Toyota Motor Hokkaido, Inc.	Transmissions, transfers, aluminum wheels, drivetrain parts, etc.	1992	1,702	100
Toyota Motor Tohoku Co., Ltd.	Mechanical and electronic parts	1998	237	100
Toyota Auto Body Co., Ltd.	Hiace, Liteace, Voxy, Noah, Estima, Prius, Land Cruiser, Alphard, Ipsum, Townace, Regiusace, Coaster, Estima Hybrid, Alphard Hybrid, LX470	1945	10,628	56.03
Kanto Auto Works, Ltd.	Century, Crown, Corolla Spacio, Corolla Fielder, Isis, Belta, SC, Auris, BLADE	1946	5,528	50.08
Central Motor Co., Ltd.	Raum, MR-S, Scion xB, Corolla Axio, Corolla hatchbacks	1950	1,194	77
Gifu Auto Body Industry Co., Ltd.	Hiace	1940	958	47.71
Daihatsu Motor,Co., Ltd.	Rush, Passo, Probox, Succeed, bB, Porte, SIENTA	1907	11,209	51.19
Hino Motors, Ltd.	Dyna, Townace, Liteace, FJ Cruiser, Toyoace, Hilux Surf	1942	9,507	50.11
Toyota Industries Corp.	Vitz, RAV4	1926	10,584	23.51
Tahara plant	Lexus	?	?	100
	We know there are more, would anyone care to contribute?

International Diversification and Return of Investment:

                             Toyota has found that international diversification allows it to better exploit its core competence, because sharing knowledge resources across subsidiaries can produce synergy. Also, firm’s returns may affect its decision to diversify internationally .For example ,poor retunes from domestic market may encourage a  firm to expand internationally diversified firms may have access to more flexible labor markets, as the Japanese do in the united states. In June 2006, Toyota had 52 overseas manufacturing companies in 27 countries outside Japan; Toyota markets vehicles in more than 170 countries / regions. The Toyota Motor Group sold about 8.8 million Toyota/Lexus, Daihatsu and Hino vehicles worldwide in 2006, marking a new record. In 2007, the Group is aiming for a 6 percent increase in worldwide sales.

Toyota’s competitive advantage in the automobile sector:

                        There had been this wide, long-standing recognition of Toyota as the premier automobile manufacturer in terms of the unmatched combination of high quality, low cost, short lead-time and flexible production. And Toyota's operating system—the Toyota Production System—had been widely credited for Toyota's sustained leadership in manufacturing performance. Furthermore, Toyota had been remarkably open in letting outsiders study its operations. The American Big Three and many other auto companies had done major benchmarking studies, and they and other companies had tried to implement their own forms of the Toyota Production System. There is the Ford Production System, the Chrysler Operating System, and General Motors went so far as to establish a joint venture with Toyota called NUMMI, approximately fifteen years ago.

Toyota’s Innovation (technology and ideas):

                                                As gas prices continue to soar, American drivers are desperate to find cheaper solutions for the morning commute. Automaker Toyota -- famous for pioneering gasoline-electric hybrid technology -- is prepared to supply that need by producing vehicles powered by ethanol and other alternative fuels. "We're already developing vehicles that can operate in ethanol-rich Brazil," said Toyota North America President Jim Press on Tuesday. "We're optimistic that we can offer similar vehicles to American consumers." Press did not expand on the company's plans for flexible fuels, but noted that Toyota would be expanding its hybrid technology, spearheaded by the Prius model, and is currently developing a plug-in hybrid. "Hybrid technology can be teamed with every other promising technology to make it even more efficient and fuel-stingy, whether it's high-tech gas engines, clean diesels, biodiesel, ethanol, plug-in hybrids or hydrogen fuel cells," Press said. Interest in hybrids has grown proportionately to skyrocketing gasoline prices, but the vehicles still represent a small portion of the overall U.S. market. Roughly 40 percent of the United State's oil still goes to gasoline demand for traditional vehicle use, government figures state. While Toyota is enjoying some success in the hybrid market, American-based competitor Ford has reduced its focus on the technology, moving away from its proposed goal of building 250,000 hybrid vehicles annually by 2010. Ford seems skeptical of the ideas that hybrids will improve the environment, reduce America's dependency on foreign oil, and that enough customers will participate to make it a reasonable investment.

Knowledge to Predict Future Needs Of Industry:

                  Toyota uses its knowledge to predict the future needs of the automobile Industry and going to make hybrid technology. The Toyota Corporation intends to develop a plug-in hybrid vehicle for its demonstration fleet by 2010, according to an announcement made by Chief Executive Officer Katsuaki Watanabe. The planned plug-in hybrids are already under development, with two prototypes currently undergoing demonstration tests by researchers at the University of California. But while existing prototypes operate with nickel-metal-hydride battery packs, Toyota aims for its new hybrids to be equipped with lithium-ion batteries.

                                         Lithium-ion batteries, already widely used in consumer electronics, provide more energy per unit weight than older nickel-metal-hydride batteries, and can store a charge for longer when not in use.
Watanabe cautioned that while successful lithium-ion batteries have already been developed for hybrid electric automobiles, it is premature to assume that such batteries can be mass produced with existing techniques.” As of today in the lab, the small volume of lithium-ion we have already developed is closer to the level we are satisfied with, but that is only in small quality," he said. "There is a huge difference between small volume and mass production of lithium-ion.” The remarks were interpreted as a response to General Motors' (GM) alliance with battery maker A123, which has so far failed to deliver mass production of lithium-ion batteries. Toyota’s other planned efforts in the area of fuel efficiency include the unveiling of new hybrid-only models in 2009, increased investment in the production of ethanol from wood waste, the expansion of a joint Panasonic-Toyota batter factory, the introduction of "clean diesel" V-8 versions of the Tundra pickup and Sequoia SUV and the sale of 1 million hybrid vehicles by 2012. In addition, Watanabe announced the company's intention to meet California's 35 mile per gallon fleet standard "well in advance" of the 2020 deadline. Unlike competitor GM, Toyota is conducting all of its research in-house, rather than in partnership with small or start-up companies. According to Watanabe, this will make technological development "faster and more efficient."

The Training and Development of Personnel’s and Compensation :

                                        

                                    A common expression heard around Toyota is “We do not just build cars, we build people.” Every new product development program, every prototype, every quality defect in the factory, and every kaizen activity is an opportunity to develop people. When former Toyota Motor Manufacturing North American President Atushi (Art) Niimi was asked about his greatest challenge when trying to teach the Toyota Way to his American managers he responded: “They want to be managers not teachers.” He explained that every manager at Toyota is a teacher. Developing exceptional people is their number one priority. This has become ingrained in the Toyota Way as a cultural value throughout the company. It is frequently talked about in other companies, but rarely practiced.

                                           The philosophy of developing people is so pivotal to Toyota that six of the fourteen principles outlined in The Toyota Way are related to it:

                          Principle 1:  Base management decisions on a long-term philosophy even at the expense of short-term financial goals—perhaps the most important long-term investment Toyota makes is in its people and the passion to keep team associates employed for their careers reflects that value.

                          Principle 6:  Standardized processes are the foundation for continuous improvement—as we will see standardized work and job instruction training goes hand in hand and long-term team associates need to learn to see waste and make improvements.

                          Principle 9: Grow leaders who thoroughly understand the work, live the philosophy and teach it to others—teaching is the most highly valued skill of leaders and leaders have to deeply understand the work to teach and coach.

                          

                           Principle 10:  Develop exceptional people and teams who follow your company’s philosophy—Teams depend on well-trained people and part of individual development is learning to work in teams.

                           Principle 11:   Respect your suppliers by challenging them and helping them improve—Suppliers need to have the same talent level as Toyota team associates and are developed in similar ways.

                           Principle 14: Become a learning organization through relentless reflection and continuous improvement—this was intentionally at the top of the hierarchy of the Toyota Way pyramid as becoming a learning organization is the highest level of organizational effectiveness.

  

                 Some might debate whether people are born with talent, or whether it is developed. Toyota’s stand is clear-gives us the seeds of talent and we will plant them, tend the soil, water and nurture the seedlings, and eventually harvest the fruits of our labor. This analogy of planting seeds and growing people is a common one within Toyota, possibly tracing back to the company being founded in a farming community. Of course the wise farmer selects only the best seeds, but even with careful selection there is no guarantee that the seeds will grow, or that the fruits they yield will be sweet, and yet the effort must be made because it provides the best chance of developing a strong crop. Toyota considers people’s native-born gifts to be only about 10% of the total talent picture (or less). In other words, natural talent gifts account for only 10% of the full capability of an individual. Fully 90% or more of what we consider talent in the life of company employees is actually learned through effort and repeated practice. This is the essence of Toyota’s success. Begin with a good foundation— a person who has the capacity and desire to learn and then develop specific talents through repeated effort and practice.

The Toyota’s Production System:

                 Many credit Toyota’s success to aspects of the Toyota Production System, established by Taïchi Ohno and Shigeo Shingo from the late 1950s through 1970 (when it gained the name). It includes aspects of Jidoka, just-in-time production, and kaizen, reducing both inventories and defects. The system is used worldwide, but is only one of the reasons for Toyota’s success.

Jidoka is not letting a defect go from one machine to the next, particularly in automated machinery; essentially, it adds the ability to detect unacceptable quality during the process of production rather than waiting until the end, when it may be hidden. The name itself is a Japanese pun on the term “automation,” adding the character for a person into the middle. Jidoka was actually implemented by the Toyoda power looms before Toyota was created. Jidoka both reduces costs and increases reliability.

Just-in-time production is the principle of having parts ready just as they are needed, rather than maintaining inventories across an assembly plant and in warehouses.  Most writers tend to focus on the cost savings from having less capital tied up in inventory under this system, but there is another advantage: engineering changes (to increase reliability or functionality, or to cut cost) can take effect much more quickly, since stockpiles of parts do not need to be cleared out; and problems with individual parts can be detected much more quickly since they are used closer to the time they are made.

References:

JEFEREY, K.L (2004).The Toyota’s Way: 14 Management principles from the world’s greatest manufacturer. USA: McGraw Hill Publisher.

JEFFREY,K.L & MICHAEL,H.(2007).TOYOTA CULTURE: The Herat and Soul Of the Toyota Way.Center for Quality and Organization.

KOICHI, S. (1994). The Japanese Auto Mobile Industry. London: The Athlone Press.

LEWIS,K.P.(2003).Henery Ford and the automobile Indusry.New York:The Rosen Publishing.

MICHEAL,W.R.(1999).General Motors:A Photographic History.Chicago:Arcadia Publishing.

SATOSHI, H. (2006).Inside the Mind of Toyota: Management Principles for enduring growth. New York :Productivity Press.

TAIICHI,O.(1998).Toyota Production System:Beyond Large scale Production.Toyko:Diamond,Inc.

WILLIAM, P. (2006).Billy Alfred, and General Motors: The story of two Unique Man. USA:AMACOM.